By Andrew Welsch
Vanguard is launching three fixed income exchange-traded funds, adding to its burgeoning bond fund lineup. Its newest entries: Vanguard Government Securities Active ETF (VGVT), Vanguard Total Treasury ETF $(VTG.AU)$, and Vanguard Total Inflation-Protected Securities ETF (VTP).
All three new funds are managed by Vanguard's fixed income group, which has now launched nine funds total this year.
VGVT is an actively managed government bond fund that aims to outperform the broad Treasury market by actively managing interest rate risks, according to the company. The fund's expense ratio is 0.1%.
It aims to invest in government securities across maturities with an intermediate duration (a measure of interest rate risk that is linked to the bonds' maturity) of approximately 5.8 years, according to Roger Hallam, global head of rates for Vanguard's Fixed Income Group. "Active duration management is one of the tools we have available to help enhance returns on that fund," he says.
The fund is Vanguard's eighth actively managed fixed income fund and the first exclusively focused on government securities. The company opted to launch the strategy in an ETF format because investors and advisors increasingly prefer to use ETFs in portfolios, Hallam says. "Also from a generic yield perspective, we feel it is a good time for investors to allocate to fixed income," he says.
Higher yields have been attracting more investors to invest in bonds and bond funds.
"For investors who have exposure to risk assets -- equities, high yield, whatever it might be -- VGVT might be a nice diversifier," Hallam says.
The other two new funds are index ETFs. VTG, which has an expense ratio of 0.03%, is a broad-based Treasury index ETF. And VTP is an index ETF focused on inflation-linked bonds and has an expense ratio of 0.05%.
New TIPS offering. VTP aims for a longer duration profile (5.26 years) than the company's existing Vanguard Short-Term Inflation Protected ETF $(VTIP)$, which has an average duration of 2.4 years. It may be a useful portfolio addition for investors eager to hedge against inflation.
Vanguard has recently been striving to build out its ETF fund lineup as investors increasingly favor ETFs over mutual funds because of their transparency and tax efficiency. For the first half of this year, U.S.-listed ETF inflows have reached $556 billion. That puts 2025 on track to set a new record for flows, according to a recent report from State Street Investment Management.
Vanguard has been striving to add more fixed-income funds and more actively managed funds, where the company sees an opportunity for it to expand its business.
With the nine bond ETFs launched this year, it has 36 funds in total, including traditional mutual funds. Over the past decade, 91% of Vanguard's active fixed income funds have outperformed their peers, according to LSEG Lipper data as of March 31.
The company, best known for its low-cost index funds, has $10.5 trillion in assets as of May 31.
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
July 09, 2025 11:32 ET (15:32 GMT)
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